July 22 (Bloomberg) -- The U.S. Federal Aviation
Administration will halt some operations at midnight after the
House of Representatives and Senate adjourned today without
agreeing on legislation to extend the agency’s authority.

The disagreement means the FAA has to furlough as many as
4,000 workers tomorrow and stop collecting about $200 million a
week in airplane-ticket and other taxes until it is resolved,
U.S. Transportation Secretary Ray LaHood said yesterday. Air-traffic controllers, considered essential employees, would
remain on the job.

The agency has been without long-term funding legislation
since 2007 and has operated on a series of short-term
extensions, the most recent of which expires at midnight.

“States and airports won’t be able to work on their
construction projects, and too many people will have to go
without a paycheck,” LaHood said in an e-mailed statement
today. The House and Senate will reconvene July 25.

Airlines won’t be allowed to collect taxes on ticket sales
until the impasse is resolved. Carriers will have to reprogram
their computer systems and websites to stop charging the taxes
on tickets they sell, Steve Lott, a spokesman for the Air
Transport Association, said by telephone today from Washington.

Ticket Taxes

Airlines have been “well aware” of the possibility of a
partial shutdown of the FAA and have prepared for it “for a
couple of days now,” he said.

Lott said he couldn’t comment on how specific airlines
would change their fares or present their changes.

In past partial shutdowns, if airlines have accidentally
charged taxes on fares, customers have had to get a tax refund
through the Internal Revenue Service or the airlines, Lott said.
The last furloughs at the FAA were in 1996 during a government-wide shutdown.

United Continental Holdings Inc., the world’s largest
carrier, is “monitoring the situation very closely” and isn’t
going to speculate on something that hasn’t happened yet, said
Megan McCarthy, a spokeswoman for the Chicago-based carrier. She
said the company doesn’t anticipate any operational impact and
referred additional questions to the ATA.

Delta Air Lines Inc.’s operations will continue normally
and without disruption regardless of the outcome of the FAA
bill, said Trebor Banstetter, a spokesman for the Atlanta-based
carrier, the world’s second-largest behind United. He also
referred further questions to the ATA.

Dreamliner Certification

Boeing Co. still expects its new composite-plastic
Dreamliner to be certified by the FAA by September for passenger
service, because the employees involved are paid from the
Treasury’s general fund, rather than from revenue generated by
user fees and the ticket tax, said Tim Neale, a spokesman for
the planemaker in Washington.

The House on July 19 approved a bill to keep the FAA funded
through Sept. 16. Written by Representative John Mica, a Florida
Republican who chairs the House transportation committee, it
includes a provision restricting subsidies to small airports
that has drawn the ire of leading Senate Democrats.

The House bill would eliminate assistance for air service
to 13 rural communities, including towns in Nevada, home state
of Senate Majority Leader Harry Reid; West Virginia, whose
senior senator is Mica’s counterpart, Commerce Committee
Chairman Jay Rockefeller; and Montana, whose senior senator, Max
Baucus, chairs the Finance Committee.

‘Punish the Senate’

Rockefeller wrote to Mica on July 19 saying, “Your attempt
to punish the Senate by hurting small community air service has
backfired -- this language only guarantees that the Senate will
reject the FAA extension.”

Baucus and Senator Lisa Murkowski, an Alaska Republican,
today urged their colleagues to back extension legislation
without the rural airports language. Republicans blocked that
bill, offered by Baucus and Rockefeller, from a floor vote.
Democrats then thwarted Republicans’ attempt to bring Mica’s
version to a vote.

Furloughed employees would include engineers,
administrative assistants and computer specialists. Air traffic
controllers, considered essential employees, are exempt.

About $2.5 billion in airport construction projects would
halt, LaHood said yesterday. Airport projects funded by the
Airport Improvement Program would lose their construction
workers and new projects wouldn’t start, he said.

Among the FAA employees who would be without work if an
extension isn’t approved are 975 in Washington, 647 at the
William J. Hughes Technical Center at the Atlantic International
Airport in New Jersey, and 124 in Oklahoma City, Olivia Alair,
an agency spokeswoman, said in an e-mail.